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Based on Goode’s “absolute worst-case scenario” numbers, ConsMin’s net present value is almost $3 per share, using a 7.5% discount and manganese and nickel prices of $US2.50 per dry metric tonne unit and $15,000/t, respectively.
Yesterday the stock closed at $1.69.
“Factor in the current approved benchmark manganese price and the NPV more than doubles that closing price,” Goode said.
ConsMin’s selldown over the past 12 months has corresponded with the controversy over managing director Michael Kiernan’s exit and a drop in the manganese price, with the stock also being hit by the “double whammy” in the last month of the fall from grace of resource stocks generally.
Goode is especially impressed by the diversified miner’s new nickel division following a site visit to the project near Kambalda in April.
“Factor in what is going on in the nickel division and the market appears to be way out in its perception of ConsMin,” Goode said.
“Plutonic used to talk about ducks, woofers, greyhounds and swans. ConsMin’s Beta Hunt nickel mine was generally regarded in the market as a bit of a woofer compared to Independence’s [Long mine] or Mincor assets but ConsMin’s woofer now appears to be maturing into a greyhound.
“ConsMin’s nickel division, now called Kambalda Nickel, easily appears to have the capability to produce 10,000 tonnes per annum for more than 10 years, and if the exploration comes through, then possibly 20,000tpa nickel can be achieved.
“ConsMin has elected to use the BHP Billiton concentrator to August 2009 after which it can do its own thing with its own concentrator if it wants to (current logic suggests that it should have its own concentrator), and then there’s the mind-boggling ore sorter – low-grade 0.5% nickel commissioning material came out as highly saleable 3-4% nickel ore – it really is a sight to see!”
The ore sorter being introduced by ConsMin consists of rock being crushed to 20-70mm and passed through electromagnetic sensors that identify a nickel-ore-bearing specimen. A laser then directs one of 20 air jets to blast the identified ore specimen out of the rock stream and over the edge of a belt.
The sorter costs about $1.6 million, with ConsMin having exclusive rights to the technology for the Kambalda region under an agreement with Ultrasort.
